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Monday, June 16, 2008

CEO vs Worker Pay

As we discussed in class, this New York Times graphic is illuminating. We are able to see how the salary of the American CEO has outpaced the pay of the average worker over the past 60+ years.

Think of the questions that many of us asked. What's fair? What multiplier of CEO pay seems right to you? Does it really make a difference whether the CEO started with or founded the company?

Please make sure you click on the image and then, once you are taken to a new page, click on it again in order to see all of its detail.

UPDATE (October 10, 2011): The Washington Post, in a series of articles called "Breakaway Wealth", has created another "CEO vs Worker Pay" graphic that utilizes more recent statistics, including what happened during the recession, and the actual dollar amounts earned by CEOs at specific companies. Be sure to explore the other examples of income inequality on the site.

UPDATE (January, 2014): Former Secretary of Labor, Robert Reich recently released a film entitled, Inequality for All, which features, among other things, illustrative animations of the issues discussed above. Watch this clip regarding the growing gap between the average male worker and the 400 wealthiest Americans (you'll need to click through to the original site):

4 comments:

I remember our discussion in class and how controversial it was. Some thought CEO's made way too much in respect to their workers, and one student even claimed without this system we wouldn't have capitalism. I'm pretty divided on this issue, because as soon as I start to feel like CEO's make too much, I remember how much they do and how important they are. So I am really split.

Personally, I don't really mind that CEOs make 400x what their workers make. I say this only in cases where the employees are being fairly paid and not overworked. If everyone is getting paid what they deserve, then I don't see a problem. One thing I do have a problem with is when CEOs set their own salaries. It seems logical since they run the company, but obviously they are going to inflate their salary and benefits. Theoretically, if there was a committee or board of employees who set everyone's salaries, and the CEO still got 400x the average worker, then I think they would really deserve the money. As long as all the employees are getting paid enough to "make" a living, then everything should be fine.

The very idea that a CEO is *worth* 400x what their average workers make is pure insanity. Do you really think an employee salary board would pay a CEO that much? There is no damned way. Corruption is the reason why they are paid so much, not ability. Why is it that Japanese CEOs are more educationally qualified on average than American CEOs, yet they make around 11 times what average workers make, rather than 475 times? Japanese companies are doing quite well, so it isn't ability. The answer is that we live in a failed system. Without compensation reform, we are going to continue to see this wealth drain going to the very top.

Ok, folks. Looking at these graphics it's hard not to be shocked, but, these are major corporations! Major corporations require a man/woman in charge that is a tad bit more special than the rest. There's a reason they get paid more to be chief executive officer. Take Johnson & Johnson for example. You could probably find 15 objects you use daily that's made/manufactured by that company.Now that stat about the CEO, William Weldon, and his salary being 21.6 is interesting-see the breakdown here: http://en.wikipedia.org/wiki/William_C._Weldon

If you examine his background, you can't tell me he did not work hard to get there. I also happen to know that Johnson & Johnson does a great amount of philanthropic work. Drive 45 minutes north to the Kenosha and Racine communities of Wisconsin and you'll see what I'm talking about. Not only do they employ a great amount of the population but they also give back in the form of parks etc.

I'm sure you guys are examining this "Occupy Wall Street" movement closely, perhaps more closely than I. It seems to me that a bunch of people have quit searching for jobs to yell at the people who have the best paying jobs in the country for working hard. May I ask this question? What incentive do CEO's have to keep working if their salary is not a reflection of the political/mental/geo-locational/and other sacrifices and amount of work they've put in over their lifetime to get there?

If you don't like it, the beauty is that you don't have to. Go vote for someone next year that has the same values. Don't buy Pfizer products. Just please don't whine about it. These people worked hard in my book to get where they are. It's capitalism. You could always move to China, Cuba, Laos, Vietnam or North Korea. See how your ideas will be received there

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